Do mutual funds herd in industries?
Jaideep Chowdhury and
Journal of Banking & Finance, 2015, vol. 52, issue C, 1-16
This study examines whether mutual funds herd in industries and the extent to which such herding impacts industry valuations. Using two herding measures proposed by Lakonishok et al. (1992) and Sias (2004) we document that mutual funds herd in industries. We show that industry herding is not driven by fund flows and that it is not a manifestation of individual stock herding. We also find evidence indicating that herding in industries by mutual funds is related to the industry momentum phenomenon first documented by Moskowitz and Grinblatt (1999), but it does not drive industry valuations away from their fundamentals.
Keywords: Herding; Mutual funds; Industry momentum (search for similar items in EconPapers)
JEL-codes: G10 G20 G23 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:52:y:2015:i:c:p:1-16
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